Ghana’s 2025 budget, delivered by Finance Minister Dr. Cassiel Ato Forson, focuses on economic recovery, job creation, and fiscal responsibility amid severe economic challenges. Key highlights include spending cuts, ambitious GDP growth targets, tax reforms, and significant social protection initiatives. The budget aims to restructure debt, stabilize the cedi, and promote pro-growth policies while addressing critical sectors like energy and cocoa.
In a significant turn for Ghana’s economic management, Finance Minister Dr. Cassiel Ato Forson delivered the 2025 budget focused on recovery, job creation, and fiscal responsibility under President John Mahama’s administration. This plan addresses Ghana’s critical financial situation marked by high debt and inflation, aiming to redefine economic stability through strategic reforms and targeted initiatives.
Ghana is grappling with a multifaceted economic crisis. Inflation has increased from 23.2% in 2023 to 23.8% in 2024, surpassing expectations. Furthermore, public debt has reached GH¢726.7 billion, constituting 61.8% of GDP, alongside GH¢67.5 billion owed in arrears, notably to road contractors. The energy sector’s financial strains are reflected in GH¢20.8 billion costs for 2024, with forecasts of GH¢35 billion deficits for 2025, and the cocoa industry’s production has dropped by 50% under COCOBOD’s significant debts of GH¢32 billion.
To adhere to fiscal discipline, the government announced substantial spending cuts. The number of ministries has decreased from 30 to 23, with the ministerial count reduced from 88 to 60. Comprehensive debt management strategies will be implemented to create fiscal buffers and optimize repayment schedules. Additional measures include the enforcement of commencement certificates and the integration of procurement systems to decrease overspending, while eliminating costly initiatives such as GhanaCARES and reallocating Development Authorities’ responsibilities to District Assemblies.
The budget outlines a robust target framework for 2025, including a minimum overall real GDP growth rate of 4.0%, a non-oil real GDP growth target of 4.8%, and a target inflation rate of 11.9%. Additionally, a primary balance surplus of 1.5% of GDP is anticipated, with gross international reserves covering a minimum of three months of imports, setting a clear path towards economic stabilization.
Tax reforms include the abolition of the E-Levy, a 1% mobile money tax, alongside various other levies. Conversely, new tax adjustments aim to enhance revenue through an increased mining levy to capture gold price surges and the reintroduction of road tolls with digital payment options.
Prominent initiatives within the budget involve establishing a 24-hour economy to encourage constant business operations and a $10 billion “Big Push” infrastructure investment plan encompassing roads, markets, and hospitals. The new “No-Fees-Stress” initiative will provide free first-year tertiary education, with provisions for free sanitary pads for schoolgirls and increased funding for school feeding programs. Also, there are plans to reduce the tax refund ceiling to 4%, resulting in savings of GH₵3.8 billion to counteract revenue losses and a labor export program aimed at formalizing the migration of Ghanaian workers for international job opportunities.
Social protection funding highlights the budget’s focus on public welfare, with allocations of GH₵499.8 million for free tertiary education fees, GH₵292.4 million for sanitary pads, GH₵9.93 billion for the National Health Insurance Scheme, and enhancements to programs like LEAP, School Feeding, and the Capitation Grant. Additionally, the budget plans to reintroduce technology-driven road tolls and strengthen frameworks for non-tax revenue collection.
The 2025 budget of Ghana, presented by Minister Dr. Cassiel Ato Forson, emphasizes strategic fiscal management and economic recovery amidst a challenging financial landscape. Key highlights include significant spending cuts, ambitious growth targets, and critical social protection initiatives aimed at enhancing public welfare. The abolition of certain taxes, alongside new revenue generation measures, reflects a comprehensive approach to stabilizing the economy and fostering growth in various sectors, thus highlighting the government’s commitment to both economic recovery and social support.
Original Source: techlabari.com
